2016 Wind Technologies Market Report: Summary...2016 Wind Technologies Market Report Purpose, Scope, and Data: • Publicly available annual report summarizing key trends in the U.S

1U.S. DEPARTMENT OF ENERGY OFFICE OF ENERGY EFFICIENCY & RENEWABLE ENERGY

2016 Wind Technologies Market Report: SummaryRyan Wiser & Mark BolingerLawrence Berkeley National LaboratoryAugust 2017


2016 Wind Technologies Market Report

Purpose, Scope, and Data:• Publicly available annual report summarizing key trends in the U.S. wind

power market, with a focus on 2016

• Scope primarily includes wind turbines over 100 kW in size

• Separate DOE-funded reports on distributed and offshore wind

• Data sources include EIA, FERC, SEC, AWEA, etc. (see full report)

Report Authors:• Primary authors: Ryan Wiser and Mark Bolinger, Berkeley Lab

• Contributions from others at Berkeley Lab, Exeter Associates, NREL

Funded by: U.S. DOE Wind Energy Technologies Office

Available at: http://energy.gov/eere/wind


Report Contents

• Installation trends• Industry trends• Technology trends• Performance trends• Cost trends• Wind power price trends• Policy & market drivers• Future outlook


Key Findings

• Wind capacity additions continued at a rapid pace in 2016, w/ significant additional new builds anticipated over next four years in part due to PTC

• Wind has been a significant source of new electric generation capacity additions in the U.S. in recent years

• Supply chain continued to adjust to swings in domestic demand, but domestic content for nacelle assembly, towers, and blades is strong

• Turbine scaling is significantly boosting wind project performance, while the installed cost of wind projects has declined

• Wind power sales prices are at all-time lows, enabling economic competitiveness despite low natural gas prices

• Growth beyond current PTC cycle remains uncertain: could be blunted by declining federal tax support, expectations for low natural gas prices and solar costs, and modest electricity demand growth


Installation Trends


• $13 billion invested in wind power project additions in 2016• Nearly 90% of new 2016 capacity located in the Interior region• First offshore project—30 MW in Rhode Island—commissioned

Wind Additions Continued at a Rapid Pace in 2016, with 8,203 MW of New Capacity, Bringing Total to 82 GW

0612182430364248546066727884

0123456789

1011121314

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Southeast (annual, left scale)

Northeast (annual, left scale)

Great Lakes (annual, left scale)

West (annual, left scale)

Interior (annual, left scale)

Total US (cumulative, right scale)

Cum

ulat

ive

Cap

acity

(GW

)

Annu

al C

apac

ity (G

W)

Installation Trends


Wind Power Represented 27% of Electric-Generating Capacity Additions in 2016

• Over last decade, wind has comprised 31% of capacity additions nation-wide, and a much higher proportion in some regions

InteriorGreatLakes

West

Southeast

Northeast

Installation Trends


• U.S. also remains a distant second to China in cumulative capacity• Global wind additions in 2016 were 14% below their record high in 2015

The U.S. Placed 2rd in Annual Wind Power Capacity Additions in 2016

Annual Capacity (2016, MW)

Cumulative Capacity (end of 2016, MW)

China 23,370 China 168,732 United States 8,203 United States 82,143 Germany 5,443 Germany 50,018 India 3,612 India 28,700 Brazil 2,014 Spain 23,074 France 1,561 United Kingdom 14,543 Turkey 1,387 France 12,066 Netherlands 887 Canada 11,900 United Kingdom 736 Brazil 10,740 Canada 702 Italy 9,257 Rest of World 6,727 Rest of World 75,576 TOTAL 54,642 TOTAL 486,749

Installation Trends


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Denm

ark

Port

ugal

Irela

nd

Spai

n

Ger

man

y

Rom

ania

U.K

.

Swed

en

Aust

ria

Net

herla

nds

Pola

nd

Turk

ey

Uni

ted

Stat

es

Italy

Cana

da

Fran

ce

Aust

ralia

Braz

il

Indi

a

Chin

a

Mex

ico

Japa

n

GLO

BAL

Approximate Incremental Wind Penetration, end of 2016

Approximate Cumulative Wind Penetration, end of 2015

Estim

ated

Win

d Ge

nera

tion

as a

Prop

ortio

n of

Ele

ctric

ity C

onsu

mpt

ion

U.S. Lagging Other Countries in Wind As a Percentage of Electricity Consumption

Note: Figure only includes the countries with the most installed wind power capacity at the end of 2016

Installation Trends


Geographic Spread of Wind Projects in the United States Is Reasonably Broad

Note: Numbers within states represent cumulative installed wind capacity and, in brackets, annual additions in 2016

Installation Trends


Texas Installed the Most Wind Capacity in 2016; 14 States >10% Wind Energy

• Texas had almost 3 times as much wind capacity as the next-highest state

• 26 states had > 500 MW of capacity at end of 2016 (18 > 1 GW, 10 > 3 GW)

• IA = 37% of total in-state generation from wind; SD = 30%, KS = 30%; 14 states > 10%)

Installed Capacity (MW) Percentage of In-State Generation

Annual (2016) Cumulative (end of 2016) Actual (2016)* Texas 2,611 Texas 20,320 Iowa 36.6% Oklahoma 1,462 Iowa 6,911 South Dakota 30.3% Iowa 707 Oklahoma 6,645 Kansas 29.6% Kansas 687 California 5,656 Oklahoma 25.1% North Dakota 603 Kansas 4,451 North Dakota 21.5% Nebraska 438 Illinois 4,026 Minnesota 17.7% Minnesota 291 Minnesota 3,499 Colorado 17.3% Maine 288 Oregon 3,163 Vermont 15.4% Missouri 201 Washington 3,075 Idaho 15.2% Illinois 184 Colorado 3,026 Maine 13.9% West Virginia 103 North Dakota 2,746 Texas 12.6% Ohio 102 Indiana 1,897 Oregon 12.1% Michigan 80 New York 1,827 New Mexico 10.9% Wyoming 80 Michigan 1,611 Nebraska 10.1% New York 78 Wyoming 1,489 Wyoming 9.4% Utah 64 Pennsylvania 1,369 Montana 7.6% Colorado 61 Nebraska 1,328 Washington 7.1% Rhode Island 45 New Mexico 1,112 California 6.9% Pennsylvania 40 South Dakota 977 Hawaii 6.7% New Mexico 32 Idaho 973 Illinois 5.7% Rest of U.S. 48 Rest of U.S. 6,041 Rest of U.S. 1.0% TOTAL 8,203 TOTAL 82,143 TOTAL 5.6%

* Based on 2016 wind and total generation by state from EIA’s Electric Power Monthly.

Installation Trends


0

20

40

60

80

100

120

140

160

Wind Natural Gas Solar Storage Other Nuclear Coal

Nam

epla

te C

apac

ity (G

W)

Entered queue in 2016 Total in queue at end of 2016

Interconnection Queues Demonstrate that a Substantial Amount of Wind Is Under Consideration

• Wind = 34% of capacity in sampled 35 queues

• Wind additions in 2016 = largest amount since 2009

Note: Not all of this capacity will be built

• AWEA reports 21 GW of capacity under construction or in advanced development at end of 1Q2017

Installation Trends


0

5

10

15

20

25

30

35

40

MISO /Midwest

SPP ERCOT Mountain Northwest PJM ISO-NewEngland

New YorkISO

California Southeast

Nam

epla

te W

ind

Pow

er C

apac

ity (G

W) Entered queue in 2016 Total in queue at end of 2016

Larger Amounts of Wind Planned for Midwest, Southwest Power Pool, Texas

Note: Not all of this capacity will be built

Installation Trends


Industry Trends


Vestas and GE Captured 85% of the U.S. Market in 2016

• Globally, Vestas, GE, and Goldwind were the top suppliers • Chinese suppliers occupied 4 of the top 10 spots in the global ranking,

based almost entirely on sales within their domestic market

0

2

4

6

8

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12

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16

18

20

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Turb

ine

OEM

US

Mar

ket S

hare

by

MW

Other REpower Acciona Clipper Suzlon Mitsubishi Goldwind Vensys Nordex Gamesa Siemens GE Wind Vestas

# of

OEM

s Ser

ving

>1%

of Y

early

Mar

ket

# of OEMs (right scale)

Industry Trends


Manufacturing Supply Chain Continued to Adjust to Swings in Domestic Demand

Note: map not intended to be exhaustive

• Continued near-term expected growth, but strong competitive pressures and possible reduced demand as PTC is phased down

• 3 domestic manufacturing facility closures in 2016; 2 new openings

• Many manufacturers remain, and “Big 3” OEMs all have at least one facility

• Wind related jobs increased 32% from 2015, to 102,000

Industry Trends


Domestic Manufacturing Capability for Nacelle Assembly, Towers, and Blades Is Reasonably Well Balanced Against Near-Term Demand Forecasts

Industry Trends


Turbine OEM Profitability Has Generally Rebounded Over the Last Four Years

Industry Trends


Imports of Wind Equipment Are Sizable; Exports Continued to Decline in 2016

Notes: Figure only includes tracked trade categories; misses other wind-related imports; see full report for the assumptions used to generate this figure

Industry Trends

• U.S. is a net importer of wind equipment

• Exports of wind-powered generating sets decreased to just $17 million in 2016; no ability to track other wind-specific exports, but total ‘tower and lattice mast’ exports equalled $46 million


Tracked Wind Equipment Imports in 2016: 46% Asia, 40% Europe, 14% Americas

Industry Trends

Note: Tracked wind-specific equipment includes: wind-powered generating sets, towers, hubs and blades, wind generators and parts


Source Markets for Imports Vary Over Time, and By Type of Wind Equipment

• Majority of imports of wind-powered generating sets from home countries of OEMs, dominated by Europe

• Significant imports of towers from Asia, but some decline over time as tariff measures affected imports from China and Vietnam

• Majority of imports of blades & hubs from China, Brazil, Europe

• Globally diverse sourcing strategy for generators & parts

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20050.6B

20061.4B

20072.8B

20082.8B

20092.6B

20101.3B

20111.3B

20121B

20130.02B

20140.3B

20150.2B

20160.1B

Expo

rtin

g Co

untr

y (%

of a

nnua

l im

port

s)

Annual Imports

Wind-powered Generating SetsCanada

China

Denmark

Spain

20120.9B

20130.3B

20140.5B

20150.8B

20160.9B

Blades & Hubs

SpainDenmarkItaly

Brazil

China

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20110.5B

20120.9B

20130.1B

20140.2B

20150.3B

20160.3B

Spain

Canada

Vietnam

S. Korea

Indonesia

Towers

20120.5B

20130.2B

20140.3B

20150.4B

20160.3B

Mexico

Germany

Serbia

Vietnam

China

Generators & Parts

Industry Trends


Domestic Manufacturing Content Is Strong for Nacelle Assembly, Towers, and Blades, but U.S. Is Highly Reliant on Imports for Equipment Internal to the Nacelle

• Imports occur in untracked trade categories, including many nacelle internals; nacelle internals generally have domestic content of < 20%

Domestic Content for 2016 Turbine Installations in the U.S. Towers Blades & Hubs Nacelle Assembly

65-80% 50-70% > 90% of nacelle assembly

Industry Trends


The Project Finance Environment Remained Strong in 2016

• Sponsors raised $6.4 billion of tax equity and $3.4 billion of debt in 2016• Tax equity yields drifted slightly higher, as did debt interest rates late in

the year—albeit from a particularly low starting point early in 2016

0%

2%

4%

6%

8%

10%

12%

Jan-

05Ju

l-05

Jan-

06Ju

l-06

Jan-

07Ju

l-07

Jan-

08Ju

l-08

Jan-

09Ju

l-09

Jan-

10Ju

l-10

Jan-

11Ju

l-11

Jan-

12Ju

l-12

Jan-

13Ju

l-13

Jan-

14Ju

l-14

Jan-

15Ju

l-15

Jan-

16Ju

l-16

Jan-

17

Tax Equity Yield (after-tax)

15-Year Debt Interest Rate (after-tax)

15-Year Debt Interest Rate (pre-tax)

Industry Trends


IPPs Own the Majority of Wind Assets Built in 2016

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Other

Publicly Owned Utility (POU)

Investor-Owned Utility (IOU)

Independent Power Producer (IPP)% o

f Cum

ulat

ive

Inst

alle

d Ca

paci

ty

Other:43 MW (0.5%)

IPP:7,142 MW (87%)

IOU:1,017 MW

(12%)

2016 Capacity byOwner Type

Industry Trends


Long-Term Sales to Utilities Remained the Most Common Off-Take Arrangement, but Direct Retail Sales Gained Ground

• 24% of added wind capacity in 2016 are from direct retail sales; 39% of total wind capacity contracted through PPAs in 2016 involve non-utility buyers

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Merchant/Quasi-Merchant On-Site Direct Retail Power Marketer POU IOU

% o

f Cum

ulat

ive

Inst

alle

d Ca

paci

ty

IOU:2,283 MW

(28%)

POU:2,014 MW

(25%)

Direct Retail2,005 MW

(24%)

Merchant:1,816 MW

(22%)

Power Marketer81 MW (1%)

2016 Capacity byOff-Take Category

Industry Trends


Technology Trends


Turbine Nameplate Capacity, Hub Height, and Rotor Diameter Have All Increased Significantly Over the Long Term

0

10

20

30

40

50

60

70

80

90

100

110

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2.2

1998-99

2000-01

2002-03

2004-05

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Commercial Operation Year

Average Nameplate Capacity (left scale)Average Rotor Diameter (right scale)Average Hub Height (right scale)Av

erag

e N

amep

late

Cap

acity

(MW

)

Aver

age

Hub

Heig

ht &

Rot

or D

iam

eter

(m)

Technology Trends


Growth in Rotor Diameter Has Outpaced Growth in Nameplate Capacity and Hub Height in Recent Years

Nameplate Capacity

Hub Height

Rotor Diameter

0102030405060708090100110120

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1998-99

2000-01

2002-03

2004-05

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Ave

rage

Rot

or D

iam

eter

(m

eter

s)

Turb

ine

Roto

r D

iam

eter

(%

of t

otal

tur

bine

s fo

r yea

r)


≥120 m110 - 120 m100 - 110 m90 - 100 m80 - 90 m70 - 80 m<70 mAverage

0.00.20.40.60.81.01.21.41.61.82.02.22.4

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1998-99

2000-01

2002-03

2004-05

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Aver

age

Nam

epla

te C

apac

ity (M

W)

Turb

ine

Nam

epla

te C

apac

ity(%

of t

otal

turb

ines

for y

ear)


≥ 3.0 MW2.5 - 3.0 MW2.0 - 2.5 MW1.5 - 2.0 MW1.0 - 1.5 MW<1.0 MWAverage

0

10

20

30

40

50

60

70

80

90

100

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1998-99

2000-01

2002-03

2004-05

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Aver

age

Hub

Hei

ght (

met

ers)

Turb

ine

Hub

Heig

ht

(% o

f tot

al tu

rbin

es fo

r yea

r)


≥100 m90 - 100 m80 - 90 m70 - 80 m<70 m

Technology Trends


Turbines Originally Designed for Lower Wind Speed Sites Have Rapidly Gained Market Share

Specific Power

IEC Class

Specific Power by Selected IEC Class

100

150

200

250

300

350

400

450

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1998-99

2000-01

2002-03

2004-05

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Ave

rage

Spe

cific

Pow

er (

W/m

2)

Turb

ine

Spec

ific

Pow

er

(% o

f tot

al t

urbi

nes

for y

ear)


≥180 - 200 W/m2≥200 - 250 W/m2≥250 - 300 W/m2≥300 - 350 W/m2≥350 - 400 W/m2≥400 - 700 W/m2Average

1.0

1.2

1.4

1.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1998-99

2000-01

2002-03

2004-05

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Ave

rage

IEC

Clas

s

Turb

ine

IEC

Clas

s(%

of t

otal

tur

bine

s fo

r yea

r)


Class 3Class 2/3Class 2Class 1/2Class 1Average

Note: Class S-2, S-2/3 and S-3 turbines are shown with hash marks in their respective bins, which are also used to calculate the average.

100

150

200

250

300

350

400

450

1998-99

2000-01

2002-03

2004-05

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Ave

rage

Sp

ecif

ic P

ow

er f

or

IEC

Cla

ss

2, 2

/3, a

nd

3 W

ind

Tu

rbin

es (

W/m

2)


IEC Class 2IEC Class 2/3IEC Class 3Fleet Average

Technology Trends


Turbines Originally Designed for Lower Wind Speeds Regularly Used in Lower & Higher Wind Sites; Taller Towers Mostly in Great Lakes and Northeast

By Region By Wind Resource Quality

Technology Trends


Pending & Proposed Projects Continue Trend of Even-Taller Turbines as Lower Wind Sites Appear to Be Targeted

75

80

85

90

95

100

0

20

40

60

80

100

120

140

160

1998

-99

2000

-01

2002

-03

2004

-05

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Pend

ing

Prop

osed

Win

d Re

sour

ce Q

ualit

y at

80

met

ers

(199

8-99

= 1

00)

Tota

l Tur

bine

Hei

ght (

met

ers)


Wind Resource QualityTurbine Height (actual)Turbine Height (FAA)

Technology Trends


A Large Number of Projects in 2016 Employed Multiple Turbine Configurations from a Single OEM

Note: Turbine configuration = unique combination of hub height, rotor diameter, and/or capacities

Technology Trends


Performance Trends


Sample-Wide Capacity Factors Have Increased, but Impacted by Curtailment and Inter-Year Wind Resource Variability

Note: The wind resource index is compiled from NextEra Energy Resources reports

0%

20%

40%

60%

80%

100%

120%

0%

6%

12%

18%

24%

30%

36%

2000100.6

2001300.9

2002732.7

2003843.1

20041064.5

20051295.1

20061538.0

200719610.0

200824014.9

200933923.6

201045233.4

201151538.6

201260044.7

201374558.2

201476059.4

201580764.4

201667571.5

Capacity Factor Based on Estimated Generation (if no curtailment) Capacity Factor Based on Actual Generation (with curtailment) Index of Inter-Annual Variability in Wind Generation (right scale)

# GW:# Projects:

Year:

Aver

age

Capa

city

Fac

tor i

n Ca

lend

ar Y

ear

Inde

x of

Inte

r-An

nual

Varia

bilit

y in

Win

d G

ener

atio

n

Performance Trends


Wind Curtailment Has Generally Declined in Recent Years; Higher in MISO & ISO-NE

• In areas where curtailment has been particularly problematic in the past –principally in Texas – steps taken to address the issue have born fruit

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2008

2010

2012

2014

2016

2008

2010

2012

2014

2016

2008

2010

2012

2014

2016

2008

2010

2012

2014

2016

2008

2010

2012

2014

2016

2008

2010

2012

2014

2016

2008

2010

2012

2014

2016

ERCOT MISO NYISO PJM ISO-NE SPP CAISO

Wind Curtailment Rate

Wind Penetration Rate

Win

d Pe

netr

atio

nan

d Cu

rtai

lmen

t Rat

es

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Total (all 7 ISOs)

Note: Each year, the total reflects only those ISOs for which we have curtailment data

Performance Trends


Impact of Technology Trends on Capacity Factors Becomes More Apparent When Parsed by Project Vintage

0%

10%

20%

30%

40%

50%

60%

'98-9923

894

'00-0126

1,750

'02-0334

1,979

'04-0527

3,634

200620

1,738

200737

5,282

200879

8,498

200996

9,578

201047

4,632

201169

5,904

2012121

13,672

20138

969

201435

4,917

201553

8,063

Weighted Average (by project vintage) Individual Project (by project vintage)

Capa

city

Fac

tor i

n 20

16 (b

y pr

ojec

t vin

tage

)

Sample includes 675 projects totaling 71.5 GW

Vintage:# projects:

# MW:

Performance Trends


Trends Explained by Competing Influence of Lower Specific Power and Higher Hub Heights vs. Build-Out of Lower Quality Wind Resource Sites through 2012

• Reversal of build-out in lower wind speed sites in 2013-2016

80

90

100

110

120

130

140

150

160

170

180

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1998-99

2000-01

2002-03

2004-05

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Aver

age

Capa

city

Fac

tor i

n 20

16

Project Vintage

Weighted-Average Capacity Factor in 2016 (left scale) Index of the Inverse of Built Specific Power (right scale) Index of Built Turbine Hub Height (right scale) Index of Built Wind Resource Quality at 80m (right scale)

Inde

xof

Cap

acity

Fac

tor I

nflu

ence

s (19

98-9

9=10

0)

Performance Trends


Controlling for Wind Resource Quality and Specific Power Demonstrates Impact of Turbine Evolution

• Turbine design changes are driving capacity factors higher for projects located in given wind resource regimes

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Lower188 projects

14.1 GW

Medium122 projects

15.9 GW

Higher170 projects

22.0 GW

Highest174 projects

19.1 GWEstimated Wind Resource Quality at Site

Specific Power ≥ 400 (30 projects, 3.0 GW) Specific Power range of 350-400 (86 projects, 7.1 GW) Specific Power range of 300-350 (323 projects, 36.3 GW) Specific Power range of 250-300 (142 projects, 15.4 GW) Specific Power < 250 (73 projects, 9.4 GW)

Sample includes 654 projects totaling 71.1 GW with a commercial operation date of 1998-2015

Aver

age

Capa

city

Fac

tor i

n 20

16Performance Trends

Presenter

Presentation Notes

revisions


Controlling for Wind Resource Quality and Commercial Operation Date Also Illustrates Impact of Turbine Evolution

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1998-99

2000-01

2002-03

2004-05

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Project Vintage

Highest Wind Resource Quality Higher Wind Resource Quality Medium Wind Resource Quality Lower Wind Resource Quality

Aver

age

Capa

city

Fac

tor i

n 20

16Performance Trends

Presenter

Presentation Notes

revisions


Change in Performance as Projects Age Also Impacts Overall Trends

Note: See full report for caveats associated with this figure

60%

70%

80%

90%

100%

110%

120%

130%

140%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

71.9 63.7 58.7 57.7 44.0 37.9 33.2 23.5 15.1 9.7 8.0 4.9 4.3 2.8 2.3 0.6 0.6

819 754 715 681 545 462 400 282 200 141 118 91 83 61 36 12 9

Median (with 10th/90th percentile error bars) Capacity-Weighted Average

Years post-COD:

Sample GW:

Sample projects:

Inde

xed

Capa

city

Fac

tor (

Year

1=1

00%

)

Sample includes projects with COD from 1998-2015

Performance Trends

Presenter

Presentation Notes

revisions


Regional Variations in Capacity Factors Reflect the Strength of the Wind Resource and Adoption of New Turbine Technology

Note: Limited sample size in some regions

0%5%

10%15%20%25%30%35%40%45%50%55%

Northeast3 projects198 MW

Southeast2 projects

70 MW

West6 projects581 MW

Great Lakes9 projects995 MW

Interior68 projects11,136 MW

Weighted Average (by region) Weighted Average (total U.S.) Individual Project (by region)

Capa

city

Fac

tor i

n 20

16

Sample includes 88 projects built in 2014 or 2015 and totaling 12,980 MW

Performance Trends


Cost Trends


Wind Turbine Prices Remained Well Below the Levels Seen Several Years Ago

• Recent turbine orders in the range of $800-1,100/kW

0200400600800

1,0001,2001,4001,6001,8002,0002,2002,4002,600

Jan-

97

Jan-

98

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10

Jan-

11

Jan-

12

Jan-

13

Jan-

14

Jan-

15

Jan-

16

Jan-

17

Announcement Date

U.S. Orders <5 MWU.S. Orders from 5 - 100 MWU.S. Orders >100 MWVestas Global AverageBNEF Global IndexMAKE U.S. IndexTrend Line for U.S. Orders

Turb

ine

Tran

sact

ion

Pric

e (2

016$

/kW

)Cost Trends


Lower Turbine Prices Drive Reductions in Reported Installed Project Costs

• 2016 projects had an average cost of $1,590/kW, down $780/kW since 2009 and 2010; limited sample of under-construction projects slated for completion in 2017 suggest no material change in costs

0

1,000

2,000

3,000

4,000

5,000

6,000

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Inst

alle

d Pr

ojec

t Cos

t (20

16 $

/kW

)

Commercial Operation Date

Interior (474 projects, 45,619 MW) West (175 projects, 12,380 MW) Great Lakes (98 projects, 7,513 MW) Northeast (118 projects, 4,479 MW) Southeast (15 projects, 907 MW) Capacity-Weighted Avg. Project Cost

Cost Trends


Economies of Scale, Especially at Lower End of Project Size Range

Project Size

Turbine Size

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

≤5 MW11 MW

7 projects

5-20 MW9 MW

1 project

20-50 MW119 MW

3 projects

50-100 MW790 MW

11 projects

100-200 MW2,974 MW19 projects

>200 MW3,232 MW13 projects

Inst

alle

d Pr

ojec

t Cos

t (20

16 $

/kW

) Capacity-Weighted Average Project Cost

Individual Project Cost

Project size:# MW:

# projects:

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

≥1 & <2 MW1,133 MW17 projects

≥2 & <3 MW5,132 MW31 projects

≥3 MW870 MW

6 projects

Inst

alle

d Pr

ojec

t Cos

t (20

16 $/

kW)

Capacity-Weighted Average Project Cost Individual Project Cost

Turbine size:# MW:

# projects:

Cost Trends


Regional Differences in Average Wind Power Project Costs Are Apparent, but Sample Size Is Limited

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Interior38 projects6,321 MW

Great Lakes3 projects237 MW

Southeast1 project103 MW

West2 projects

64 MW

Northeast10 projects

411 MW

Inst

alle

d Pr

ojec

t Cos

t (20

16 $

/kW

)

Capacity-Weighted Average Project Cost Individual Project Cost Capacity-Weighted Average Cost, Total U.S.

Cost Trends


Most 2016 Projects—and All of the Low-Cost Projects—Are Located in the Interior; Other Regions Have Higher Costs

0

2

4

6

8

10

12

1200

1500

1800

2100

2400

2700

3000

3300

3600

3900

4200

Num

ber o

f Pro

ject

s

CapEx ≥ (2016 $/kW)

Southeast

Northeast

Great Lakes

West

Interior

0

200

400

600

800

1000

1200

1400

1600

1800

1200

1500

1800

2100

2400

2700

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3300

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4200

Num

ber o

f MW

CapEx ≥ (2016 $/kW)

Southeast

Northeast

Great Lakes

West

Interior

Cost Trends


O&M Costs Varied By Project Age and Commercial Operations Date

• Capacity-weighted average 2000-16 O&M costs for projects built in the 1980s equal $69/kW-year, dropping to $57/kW-year for projects built in 1990s, to $28/kW-year for projects built in the 2000s, and to $27/kW-year for projects built since 2010

0102030405060708090

100110120130140150160

1982

1983

1984

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1986

1987

1988

1989

1990

1991

1992

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1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Commercial Operation Date

Projects with no 2016 O&M data

Projects with 2016 O&M data

Aver

age

Annu

al O

&M

Cos

t 200

0-20

16

(201

6 $/

kW-y

ear)

Cost Trends

Note: Sample is limited; few projects in sample have complete records of O&M costs from 2000-16; O&M costs reported here DO NOT include all operating costs


O&M Costs Varied By Project Age and Commercial Operations Date

Note: Sample size is limited

• O&M reported in figure does not include all operating costs: Statements from public companies with large U.S. wind portfolios report total operating costs in 2016 for projects built in the 2000s of ~$55/kW-year

05

1015202530354045505560657075

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15Project Age (Number of Years Since Commercial Operation Date)

1998-2005

2006-2011

2012-2015

Commercial Operation Date:

n=19

Med

ian

Annu

al O

&M

Cos

t (20

16 $

/kW

-yea

r)

n=40

n=41

n=11

n=8

n=6

n=32

n=42

n=25

n=41

n=12

n=41

n=9

n=23

n=37

n=32

n=24

n=19

n=12

n=8

n=9

n=8

n=6

n=5

n=5

n=7

n=8

n=23

n=4

Cost Trends


Wind Power Price Trends


Sample of Wind Power Prices• Berkeley Lab collects data on historical wind power sales

prices, and long-term PPA prices

• PPA sample includes 414 contracts totaling 38,819 MW from projects built from 1998-2016, or planned for installation in 2017 or beyond

• Prices reflect the bundled price of electricity and RECs as sold by the project owner under a PPA– Dataset excludes merchant plants, projects that sell renewable

energy certificates (RECs) separately, and direct retail sales

– Prices reflect receipt of state and federal incentives (e.g., the PTC or Treasury grant), as well as various local policy and market influences; as a result, prices do not reflect wind energy generation costs



Wind PPA Prices Very Low, Competitive with Levelized Fuel Cost of a Gas Plant

$0

$20

$40

$60

$80

$100

$120

Jan-

96

Jan-

97

Jan-

98

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

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08

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09

Jan-

10

Jan-

11

Jan-

12

Jan-

13

Jan-

14

Jan-

15

Jan-

16

Jan-

17

PPA Execution Date

Interior (25,382 MW, 244 contracts) West (7,421 MW, 77 contracts) Great Lakes (4,104 MW, 51 contracts) Northeast (1,436 MW, 29 contracts) Southeast (476 MW, 7 contracts)

Leve

lized

PPA

Pric

e (2

016

$/M

Wh)

25 MW

150 MW

50 MW

200 MW

Levelized 20-year EIA gas price projections (converted at 7.5 MMBtu/MWh)



A Smoother Look at the Time Trend Shows Steep Decline in Pricing Since 2009; Especially Low Pricing in Interior Region

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

96-9910

553

00-0117

1,249

02-0324

1,382

04-0530

2,190

200631

2,436

200726

1,781

200839

3,465

200949

4,048

201049

4,790

201144

4,835

201214

1,172

201337

5,412

201417

2,015

201517

2,249

20169

1,012

20171

230

Nationwide Interior Great Lakes West Northeast

PPA Year:Contracts:

MW:

Aver

age

Leve

lized

PPA

Pric

e (2

016

$/M

Wh)



Relative Competitiveness of Wind Power Has Been Affected by the Continued Decline in Wholesale Power Prices

• Wholesale price range reflects flat block of power across 23 pricing nodes across the U.S. (and Interior)

• Price comparison shown here is far from perfect – see full report for caveats

0

10

20

30

40

50

60

70

80

90

100

110

20039

570

200413

547

200517

1,643

200631

2,436

200726

1,781

200839

3,465

200949

4,048

201049

4,790

201144

4,835

201214

1,172

201337

5,412

201417

2,015

201517

2,249

20169

1,012

2016

$/M

Wh

Nationwide Wholesale Power Price Range (by calendar year) Interior Region Wholesale Power Price Range (by calendar year) Average Levelized Wind PPA Price with 10th/90th Percentiles (by year of PPA execution)

Year:Contracts:

MW:



Recent Wind Prices Are Hard to Beat: Competitive with Expected Future Cost of Burning Fuel in Natural Gas Plants

• Price comparison shown here is far from perfect – see full report for caveats

0

10

20

30

40

50

60

70

80

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

2046

2047

2048

2049

2050

2016

$/M

Wh

Generation-weighted average wind PPA price among 44 PPAs signed in 2014-2017 Median wind PPA price (and 10th/90th percentiles) among 44 PPAs signed in 2014-2017

Range of AEO17 natural gas fuel cost projectionsAEO17 reference case natural gas fuel cost projection



Renewable Energy Certificate (REC) Prices in Key RPS Markets Fell Significantly in 2016, Reflecting Growing Supplies

• REC prices vary by: market type (compliance vs. voluntary); geographic region; specific design of state RPS policies

$0

$10

$20

$30

$40

2010

2011

2012

2013

2014

2015

2016

2017

PJM

DCDEILMDNJOHPA

$0

$20

$40

$60

$80

2010

2011

2012

2013

2014

2015

2016

2017

New England

CT MAME NHRI

2016

$/M

Wh

$0

$2

$4

$6

$8

$10

2010

2011

2012

2013

2014

2015

2016

2017

Texas & Voluntary Market

TXVol. (nat'l)Vol. (west)



Levelized Cost of Wind Energy Is at an All-Time Low

• Estimates only reflect variations in installed cost and capacity factors; include accelerated depreciation but exclude PTC

$0

$20

$40

$60

$80

$100

$120

98-9926

849

00-0126

1,694

02-0330

1,885

04-0529

2,005

200623

1,820

200730

3,597

200864

6,305

2009103

9,575

201063

5,129

201185

6,281

2012109

9,378

201312

852

201446

5,100

201550

7,763

Nationwide (696 projects, 62,234 MW) Interior (383 projects, 38,730 MW) Great Lakes (72 projects, 7,231 MW) West (140 projects, 11,453 MW) Northeast (88 projects, 4,017 MW) Southeast (13 projects, 802 MW)

COD Year:Projects:

MW:

Aver

age

LCO

E (2

016

$/M

Wh)



Policy and Market Drivers


Federal Production Tax Credit (PTC) Remains a Core Motivator for Wind Power Deployment

• 5-year extension of PTC, plus favorable guidance allowing 4 years for project completion after the start of construction

• PTC phase-out, with progressive reduction in the value of the credit for projects starting construction after 2016

• PTC phases down in 20%-per-year increments for projects starting construction in 2017 (80% PTC value), 2018 (60%), and 2019 (40%)



State Policies Help Direct the Location and Amount of Wind Development, but Current Policies Cannot Support Continued Growth at Recent Levels

• 29 states and D.C. have mandatory RPS programs• State RPS’ can support ~3.9 GW/yr of renewable energy additions on

average through 2030 (less for wind specifically)

WI: 10% by 2015

NV: 25% by 2025

TX: 5,880 MW by 2015

PA: 8.5% by 2020

NJ: 22.5% by 2020CT: 23% by 2020

MA: 11.1% by 2009 +1%/yr

ME: 40% by 2017

NM: 20% by 2020 (IOUs)10% by 2020 (co-ops)

CA: 50% by 2030

MN: 26.5% by 2025Xcel: 31.5% by 2020

IA: 105 MW by 1999

MD: 25% by 2020

RI: 38.5% by 2035

HI: 100% by 2045

AZ: 15% by 2025

NY: 50% by 2030

CO: 30% by 2020 (IOUs)20% by 2020 (co-ops)10% by 2020 (munis)

MT: 15% by 2015

DE: 25% by 2025

DC: 50% by 2032

WA: 15% by 2020

NH: 24.8% by 2025

OR: 50% by 2040 (large IOUs)5-25% by 2025 (other utilities)

NC: 12.5% by 2021 (IOUs)10% by 2018 (co-ops and munis)

IL: 25% by 2025

VT: 75% by 2032

MO: 15% by 2021

OH: 12.5% by 2026

MI: 15% by 2021



System Operators Are Implementing Methods to Accommodate Increased Penetrations of Wind

Notes: Because methods vary and a consistent set of operational impacts has not been included in each study, results from the different analyses of integration costs are not fully comparable.

Integrating wind energy into power systems is manageable, but not free of additional costs

Transmission Barriers Remain

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2009 2010 2011 2012 2013 2014 2015 2016

Com

plet

ed T

rans

miss

ion

(mile

s/ye

ar)

≥500 kV345 kV≤ 230 kV



Future Outlook


Sizable Wind Additions Anticipated for 2016-2020 Given PTC Extension; Downturn and Uncertainty Beyond 2020

• Wind additions through 2020 consistent with deployment trajectory analyzed in DOE’s Wind Vision report; not so after 2020

0

2

4

6

8

10

12

14

1998

1999

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2014

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2016

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2018

2019

2020

2021

2022

2023

2024

2025

BNEF (2017a,f)MAKE (2017)Navigant 2017)IHS (2017)

Annu

al C

apac

ity (G

W)

Historical Additions Forecasts (bar = avg)

Future Outlook


Current Low Prices for Wind, Future Technological Advancement, and Direct Retail Sales May Support Higher Growth in Future, but Headwinds Include:

• Phase-down of federal tax incentives • Continued low natural gas and wholesale electricity prices• Modest electricity demand growth• Limited near-term demand from state RPS policies• Inadequate transmission infrastructure in some areas• Growing competition from solar in some regions

Future Outlook


• Wind capacity additions continued at a rapid pace in 2016, w/ significant additional new builds anticipated over next four years in part due to PTC

• Wind has been a significant source of new electric generation capacity additions in the U.S. in recent years

• Supply chain continued to adjust to swings in domestic demand, but domestic content for nacelle assembly, towers, and blades is strong

• Turbine scaling is significantly boosting wind project performance, while the installed cost of wind projects has declined

• Wind power sales prices are at all-time lows, enabling economic competitiveness despite low natural gas prices

• Growth beyond current PTC cycle remains uncertain: could be blunted by declining federal tax support, expectations for low natural gas prices and solar costs, and modest electricity demand growth

Conclusions


For More Information

See full report for additional findings, a discussion of the sources of data used, etc.:

• https://energy.gov/eere/wind/downloads/2016-wind-technologies-market-report

To contact the primary authors:• Ryan Wiser, Lawrence Berkeley National Laboratory

510-486-5474, [email protected]• Mark Bolinger, Lawrence Berkeley National Laboratory

603-795-4937, [email protected]

Berkeley Lab’s contributions to this report were funded by the Wind Energy Technologies Office, Office of Energy Efficiency and Renewable Energy of the U.S. Department of Energy under Contract No. DE-AC02-05CH11231. The authors are solely responsible for any omissions or errors contained herein.

Documents

2016 Wind Technologies Market Report: Summary...2016 Wind Technologies Market Report Purpose, Scope, and Data: • Publicly available annual report summarizing key trends in the U.S